New Tequilas Pour Forth To Meet Rising Popularity

Submitted by Rosco
October 12, 2007

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Distillers are on a production binge

MEXICO CITY – Lifelong Texan Neal Alan Williamson got into the tequila business mostly by accident.

After he was hired to help some distillers in Jalisco state find distribution channels in Asia, he quickly fell in love with the complex spirit.

One distiller gave him the opportunity to develop and market his own brand, and the next thing he knew, he was "in with both feet."

His brand, Tequilame, is set to arrive in Dallas this month.

As tequila takes its place alongside fine cognacs in global markets, its popularity is skyrocketing, especially at the high end. And new players are coming into a once-staid industry, including two Texans, a Philadelphia restaurant owner and Sammy Hagar, the former singer of Van Halen.

Huge liquor firms – such as Brown-Foreman of Louisville, Ky., and Beam Global Spirits and Wine of Illinois – now control most of the top 10 tequila producers.

Big producers are opening global markets at a rapid pace. Last year, tequila production was at its highest ever at an estimated 220 million liters, compared with 190 million in 1999, according to official figures. A liter is 1.05 quarts.

The rapid growth has some traditional producers worried about the quality of tequila – particularly given the wild production cycles for blue agave, the raw material for the drink.

Some producers are giving in to the temptation to make tequila from 51 percent agave sugars and 49 percent other sugars, the minimum required to use the name tequila. The blended tequilas are called mixtos and have traditionally been used for margaritas.

"Short term, I see many gains," said Fernando González, who makes Siete Leguas tequila and was the first producer of the tequila Patrón, which is highly regarded in the U.S. "But over time, we may face many problems, particularly image problems, because customers may get turned off by some of the bad quality of the products they are tasting."

Big distillers insist they are creating traditional, high-quality tequilas, especially at the premium level. For example, there is a new "extra añejo" designation for top-of-the-line tequilas that must be aged at least three years.

And the growth in the premium market means that far more tequila is made from 100 percent agave now than a decade ago, according to industry figures.

"Americans have an unprecedented number of tequila choices, particularly super premium," said Ana Jovancicevic, a spokeswoman for the Distilled Spirits Council. "The challenge is finding the right one to fit their tastes."

Mr. Williamson, a product designer and marketer, doesn't want to take shots at competitors. But he acknowledges that while some new producers are committed to an industry that goes back centuries, others are looking for a quick buck.

"Some brands are more connected to something that brings it back to its origin and culture, and some brands have nothing to do with that," said Mr. Williamson, whose company is based in San Antonio. "I wouldn't drink a mixto if you gave it to me for free."

Tequilame, which could be interpreted as "hit me with tequila," now has an extra añejo and soon will release an unaged white tequila, both made from 100 percent agave.

Philadelphia restaurant owner David Suro – a native of Jalisco, where most tequila is made – has long admired the sea of blue agave fields used to produce the spirit.

But as Mr. Suro's tequila, Siembra Azul, tries to move into Texas from its East Coast base, the landscape concerns him.

In many fields, agave plants lie rotting due to oversupply. In others, farmers have destroyed their agave crops, replacing them with corn as ethanol production pushes up prices for the grain.

And since the agave takes a decade to mature, a shortage could be around the corner, creating new pressure to make "mixed" tequilas.

"The large companies prefer to mix the tequila because they know that, sooner or later, the price of agave is going to rise and they will make more profit in the long run," he said.

Some tequila watchers worry that sudden popularity could transform tequila in the wrong way.

"Tequila is no longer just Mexico's drink but a drink that's making its way around the world," said Rogelio Luna-Zamora, a professor at the University of Guadalajara who has spent more than 20 years researching the social, economic and cultural impact of tequila.

"We have to be very careful about quality control and about keeping the drink true to its roots. Otherwise, tequila's fame will be short-lived."

There are more than 700 tequila makers in Mexico, according to the industry-run Tequila Regulatory Council.

In 2006, 106.9 million of liters of tequila were exported to the U.S., a 23 percent increase over 2005, according to Judith Meza, representative of the Tequila Regulatory Council in the Washington, D.C., office. Tequila entered the top 10 of liquors in the world five years ago, she said.

Although the biggest tequila producer, Cuervo, remains in Mexican hands, global companies have gobbled up its rivals.

Earlier this year, Brown-Foreman bought one of Mexico's most iconic tequila brands, Herradura, for $876 million.

The market shake-up, some tequila makers insist, has produced new fans such as Mr. Hagar. Though he's sold a majority interest in his Cabo Wabo tequila, Mr. Hagar is still closely involved in its production.

His restaurant in Cabo San Lucas is packed nightly with both college students slamming down shots with lemon and salt and older customers who prefer to sip their tequila quietly.

Down the road in Todos Santos, owners of Hotel California in Baja California Sur plan to enter the tequila market in Florida this fall.

And another Texan, Richard Poe of El Paso, wants to cash in on the tequila craze with his Dos Lunas, or Two Moons, brand.

In November, Mr. Poe will unveil the Dos Lunas Grand Reserve at Dallas' Galleria mall, becoming the world's first 10-year-old tequila in Baccarat crystal. The retail price: $2,500 per bottle.

Mr. Poe says he's marketing not just the tequila but the lifestyle that comes with it, much like the cigar culture. He's come up with a slick, handmade bottle to shake things up.

"Despite the rising popularity of tequila, the concepts and packaging has not kept up," he said. "The bottles and brands, for the most part, were boring: the same old styles and short, square bottles, with names that most people cannot pronounce, much less remember."

The sounds of Mozart and Vivaldi fill his factory in Arandas, Jalisco, surrounding the giant oak barrels.

Master distiller Leopoldo Solis says the music isn't for the employees.

"Tequila has a passionate soul," he said. "It's important that we understand the soul and, more importantly, enrich and serenade the soul with classical music."

KNOW YOUR TEQUILA

Blanco/White/Silver: Unaged tequila that is normally bottled right after being distilled. When the clear white tequila drips from the cooling coils of the alambique, it is correctly called silver or plata but is more commonly called white or blanco.

Tequila Joven/Gold: Silver tequila that is not aged and has added colorants and flavorings, such as caramel, oak tree extracts, glycerine or sugar syrup. These tequilas are often called suave, joven, gold or abocado, implying youth and smoothness.

Tequila Reposado/Rested or Aged: The first definitive level of aging is reposado, or rested, for tequila that remains in wood for two months but no longer than 12 months. The type of barrel used and the resins and tannins exuded have a dramatic impact on the finished product.

Tequila Añejo/Vintage or Extra Aged: The next level of aging is añejo. Añejo, which means vintage, can only appear on tequila that's aged for a minimum of one year in oak barrels. Añejos are darker in color, more complex in flavor and smoother than reposado tequilas. The commercial alcohol by volume must be adjusted by the addition of distilled water.

Tequila Extra Añejo/Ultra Aged: This is the newest classification of tequila. Ultra Aged or Extra Añejo tequila has been aged for at least three years in direct contact with holm oak or Encino oak containers. Its commercial alcohol content must also be adjusted by adding distilled water.